Iain Duncan Smith has said Britain faces a "crisis" of increased immigration from Romania and Bulgaria, as all three major parties consider their response to the Ukip Eastleigh surge.

Called to the Commons to explain how the government plans to deal with new immigrants from within the European Union once existing restrictions are lifted next year, the work and pensions secretary said he was working to "tighten up" what benefits were payable to new arrivals.

"There is somewhat of a crisis over this," he said. "Some people want to come here solely to claim benefits."

Duncan Smith, a fierce eurosceptic, also attacked the "Orwellian" European Commission for seeking to block plans to restrict welfare payments. He told MPs that the commission's approach was "very damaging to the concept of an EU that works for all it’s members".

On Monday Downing Street was forced to admit any restrictions on health and welfare benefits for immigrants from European Union states would have to apply equally to UK citizens under EU law.

Reports over the weekend suggested that changes could be rushed in before Bulgarian and Romanian citizens gain full rights to move to the UK at the end of the year, amid public concern about so-called "welfare tourism".

Ministers were said to be considering making immigrants wait for up to a year after settling in the UK before being able to seek hospital care including operations, though it is understood that emergency and ante-natal treatment would be excluded from the clampdown.

But it is thought that any restrictions would have to be based on residency, rather than nationality, in order to comply with EU laws - meaning that British nationals might also be required to prove their entitlement.

On Wednesday Nick Clegg will chair a cabinet committee looking at ways to deter Romanian and Bulgarian immigrants from moving to the UK.

The drubbing given to the Tories by Ukip in last week's Eastleigh by-election has amplified fears among the three main parties that they are vulnerable on the issue of immigration and Conservative backbenchers stood to highlight their eurosceptic credentials.

David Ruffely told MPs it was "grotesquely offensive" for the European Commission to interfere in UK benefit payments, Edward Leigh said the by-election result showed "people are hurting" and James Duddridge said the work and pensions secretary should tell Brussels to "sod off".

Shadow immigration minister Chris Bryant said the coalition had failed to prosecute any employers for paying immigrant workers less than the minimum wage. "It's time they sorted that out so fewer people chose to come here," he said.

On Thursday shadow home secretary Yvette Cooper is due to give a speech. alongside a party political broadcast by Ed Miliband, where she is expected to say there needs to be a "level playing field" for workers to stop domestic workers being undercut.

Labour front bencher Diane Abbott has warned her party not to "spiral downwards" by lurching to the right on immigration in response to the Eastleigh Ukip surge.